12(a)(2) and 15 of the Securities Act

SDNY Denies Class Certification in Two Mortgage-Backed Securities Cases

On January 18, 2011, Federal District Court Judge Harold Baer of the Southern District of New York denied plaintiffs’ motion for class certification in two related RMBS cases. Plaintiffs had sought certification of a class of all purchasers of various RMBS in connection with their claims under Sections 11, 12(a)(2) and 15 of the Securities Act which alleged that the offering documents for the RMBS contained material misrepresentations. Judge Baer concluded that class certification was not justified because individual issues – including differences in the timing of purchases and sophistication among the investors – predominated over common ones. Judge Baer also found that the proposed class consisted of sophisticated investors with sufficient resources and incentives to pursue independent litigation should they choose to do so. Decision.

SDNY Dismisses Securities Class Action Against Barclays

On January 5, 2011, Judge Paul A. Crotty of the Southern District of New York granted defendant Barclays’s Motion to Dismiss claims under Sections 11, 12(a)(2) and 15 of the Securities Act that alleged that Barclays failed to properly disclose and account for its RMBS-related exposure in the offering documents for Barclays ADS issued between April 2006 and April 2008. The court found that the plaintiffs did not have standing to pursue Section 12(a)(2) claims because they failed to alleged that they had bought shares directly from the defendants, that many of the claims were time-barred because they were filed more than one year after plaintiffs had sufficient information to be on inquiry notice of the alleged mis-statements, and that the remaining allegations were insufficient to state a claim. Decision.